FTSE at new '09 peak, Thomas Cook left out of party

Rising miners and demand for financial stocks helped the FTSE 100 hit a fresh 10-month high on Thursday but Thomas Cook was excluded from the party as it admitted it would miss profit targets next year.

The tour operator joined the chorus of travel and tourism companies bemoaning a tough market and said it would miss its operating profit target of £480m next year. That sent Thomas Cook shares down 11p, or 4.8%, to 219p.

The company also revealed it had taken a £12.6m hit from swine flu so far and that it expects a £20m impact on profits from swine flu in 2009 as a whole.

A day after rival TUI Travel admitted a slump in winter bookings, Thomas Cook said it was preparing for continued tough market conditions.

"The sector rallied last week due to an improvement in market sentiment. In our opinion this was premature," said Collins Stewart analyst Andrew Fitchie.

"We believe the tour operators will be late cycle – rising unemployment is likely to choke off holiday demand for at least the next 18 months. Merger synergy gains are almost exhausted. Whilst flexible, these businesses are highly operationally geared and we believe further scale reduction will negatively impact margins."

Sticking with travel, Carnival was also among the top fallers of the day as the cruise ship operator said its chief executive Micky Arison and his family plan to sell up to 8.5m of their shares, or about 1% total voting rights for the company. The shares closed down 27p, or 1.5%, to £18.31.

The FTSE 100 closed up 38.7 points, or 0.8%, at 4755.46 - its highest since early October last year. It is now up 35% since a trough hit in early March.

Prudential was the top riser, up 51.2p to 529.5p after the insurer raised its dividend. Fellow insurers Aviva, Standard Life, Old Mutual, Friends Provident and Legal & General all rose.

Rising commodity prices boosted miners. Kazakhmys, Xstrata, Lonmin, Rio Tinto and Antofagasta were all up more than 4%, taking up most of the spots on the FTSE 100's top ten risers' board.

Engineer Tomkins was one of the biggest risers on the FTSE 250 after its first half operating profit topped expectations at $82.3m and it said it would continue to slash costs as it faces an "uncertain" outlook.

The company is cutting another 1,600 jobs by the end of the year, having already axed 3,900 in the first half of this year. As usual, equity traders took the headcount cut as good news and the shares closed up 12.8p, or 7.2%, at 190.1p.

Industrial materials company Cookson was also in demand in the wake of positive broker comments and a strengthening steel market - where spot prices touched a 10-month high. Cookson rose 30.1p, or 8.1% to 403.8p and is now up 18% since it cheered the market with first-half results on August 4.

Analysts at Macquarie Research this week initiated Cookson shares at "outperform" with a 500p price target. They comment:

"We believe the steel cycle is turning and forecast Western world production to rise strongly in 2010 (+13% YoY) and again in 2011 (+6%), following 2009's historical 25% decline. Cookson is highly geared to recovering global steel production; 35% of group sales are of consumables sold directly to steel producers. We forecast EPS rising to 47p in 2011 from 11p in 2009. We believe the current share price factors in some, but not all the recovery potential."

On the junior market, surveillance specialists Petards were up following news of two orders from the Ministry of Defence. The first for mobile radio equipment and engineering services is for a minimum of three years, bringing revenues of more than £1m per year, Petards said. The second to make available specialist engineering resources is worth in the region of £0.3m, it added. The shares closed up 0.1p, or 17.4%, at 0.68p.